WARRANTS TO PURCHASE



 




EXHIBIT 10.17










 




THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE SOLD,
OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION
UNDER THE ACT UNLESS EITHER (i) THE DISPOSITION OF SUCH SECURITIES IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR (ii) THE DISPOSITION OF SUCH SECURITIES IS REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.




WARRANT TO PURCHASE

COMMON STOCK OF GRAND TOYS INTERNATIONAL, INC.




     This certifies that                     (the “Holder”), for value
received, is entitled to purchase from Grand Toys International, Inc. (the
“Company”)            
        (                   ) shares of the Company’s Common Stock, $0.001
par value per share (the “Common Stock”), at a per share exercise price of
$0.53 per share (the “Per Share Exercise Price”). This right may be exercised
at any time after the six month anniversary of the date hereof up to and
including 5:00 p.m. (New York City time) on the third anniversary of the date
hereof (the “Expiration Date”).



1. Exercise.




     (a) To exercise this right the Holder shall surrender to the Company at
its principal office (or at such other location as the Company may advise the
Holder in writing) this warrant, properly endorsed, with the Subscription Form
attached hereto duly filled in and signed and, if applicable, upon payment in
cash or by check of the aggregate Per Share Exercise Price for the number of
shares for which this warrant is being exercised determined in accordance with
the provisions hereof.



     (b) In lieu of exercising this warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this warrant (or the
portion thereof being canceled) by surrender of this warrant at the principal
office of the Company, together with the properly endorsed Subscription Form
and notice of such election, in which event the Company will issue to the
Holder a number of shares of Common Stock computed using the following formula:



	 	 	 	 	 
	X

	 	=
	 	Y (A-B)
	

	 	 	 	

	

	 	 	 	      A
	 
	 	 	 	 
	Where X

	 	=
	 	the number of shares of Common Stock to be issued to the Holder
	 
	 	 	 	 
	Y

	 	=
	 	the number of shares of Common Stock purchasable under this warrant

	or, if only a portion of this warrant is being exercised, the portion of this
warrant being canceled (at the date of such calculation)






 









 





	 	 	 	 	 
	A

	 	=
	 	the Fair Market Value per share of Common Stock (at the date of such
calculation)
	 
	 	 	 	 
	B

	 	=
	 	Per Share Exercise Price (as adjusted to the date of such calculation)





     For purposes of the above calculation, Fair Market Value per share of
Common Stock will be as follows:




               (1) If the Common Stock is listed on a national securities exchange,
the Nasdaq National Market or another nationally recognized trading
system as of the exercise date, the Fair Market Value per share of Common
Stock shall be deemed to be the last reported sale prices per share of
Common Stock thereon on the trading day on which a sale was made
immediately preceding the exercise date.




               (2) If the Common Stock is not listed on a national securities
exchange, the Nasdaq National Market or another nationally recognized
trading system as of the exercise date, the Fair Market Value per share
of Common Stock shall be deemed to be the amount most recently
determined by the Board of Directors to represent the fair market value
per share of the Common Stock (including without limitation a
determination for purposes of granting Common Stock options or issuing
Common Stock under an employee benefit plan of the Company); and, upon
request of the Holder, the Board of Directors (or a representative
thereof) shall promptly notify the Holder of the Fair Market Value per
share of Common Stock . Notwithstanding the foregoing, if the Board of
Directors has not made such a determination within the three-month period
prior to the exercise date, then (A) the Board of Directors shall make a
determination of the Fair Market Value per share of Common Stock within
15 days of a request by the Holder that it do so, and (B) the exercise of
this Warrant pursuant to this subsection 1(b) shall be delayed until such
determination is made.



2. Issuance of Certificates.




     Certificates for the shares of Common Stock acquired upon exercise of this
warrant, together with any other securities or property to which the Holder is
entitled upon such exercise, will be delivered to the Holder by the Company at
the Company’s expense within a reasonable time after this warrant has been so
exercised. Each stock certificate so delivered will be in such denominations
of Common Stock as may be requested by the Holder and will be registered in the
name of the Holder. In case of a purchase of less than all the shares that may
be purchased under this warrant, the Company will cancel this warrant and
execute and deliver a new warrant or warrants of like tenor for the balance of
the shares purchasable under this warrant to the Holder within a reasonable
time after surrender of this warrant.



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3. Shares Fully-Paid, Nonassessable, Etc.




     All shares of Common Stock issued upon exercise of this warrant will, upon
issuance, be duly authorized, validly issued, fully-paid and nonassessable and
free from all preemptive rights of any shareholder and free of all taxes, liens
and charges with respect to the issue thereof. The Company will at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the exercise of this warrant, such
number of its shares of Common Stock as from time to time are sufficient to
effect the full exercise of this warrant. If at any time the number of
authorized but unissued shares of Common Stock is not sufficient to effect the
full exercise of this warrant, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as is sufficient for
such purpose. The Company will take all such action as may be necessary to
assure that such securities may be issued as provided herein without violation
of any applicable law or regulation, or of any requirements of any domestic
securities exchange upon which the Common Stock may be listed; provided,
however, that the Company will not be required to effect a registration under
federal or state securities laws with respect to such exercise (except as may
be set forth in a separate written agreement between the Company and the
Holder).



4. Adjustments.




     4.1 Adjustment for Stock Splits and Combinations. If the Company at any
time or from time to time during the term of this warrant effects a subdivision
of the outstanding Common Stock, the Per Share Exercise Price in effect
immediately before that subdivision will be proportionately decreased.
Conversely, if the Company at any time or from time to time during the term of
this warrant combines the outstanding shares of Common Stock into a smaller
number of shares, the Per Share Exercise Price in effect immediately before the
combination will be proportionately increased. Any adjustment under this
Section 4.1 will become effective at the close of business on the date the
subdivision or combination becomes effective.



     4.2 Adjustment for Common Stock Dividends and Distributions. If the
Company at any time or from time to time during the term of this warrant makes,
or fixes, a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in additional
shares of Common Stock, in each such event the Per Share Exercise Price that is
then in effect will be decreased as of the time of such issuance or, in the
event such record date is fixed, as of the close of business on such record
date, by multiplying the Per Share Exercise Price then in effect by a fraction
(a) the numerator of which is the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance on the close of
business on such record date, and (b) the denominator of which is the total
number of shares of Common Stock issued and outstanding immediately prior to
the time of such issuance on the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such dividend or
distribution; provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the
date fixed therefor, the Per Share Exercise Price will be recomputed
accordingly as of the close of



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business on such record date and thereafter the Per Share Exercise Price will
be adjusted pursuant to this Section 4.2 to reflect the actual payment of such
dividend or distribution.




     4.3 Adjustments for Other Dividends and Distributions. If the Company at
any time or from time to time during the term of this warrant makes, or fixes a
record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in securities of the Company
other than shares of Common Stock, in each such event provision will be made so
that the Holder will receive upon exercise of this warrant, in addition to the
number of shares of Common Stock receivable thereupon, the amount of other
securities of the Company that it would have received had this warrant been
exercised on the date of such event and had it thereafter, during the period
from the date of such event to and including the exercise date, retained such
securities receivable by them as aforesaid, subject to all other adjustments
called for during such period under this Section 4 with respect to the rights
of the Holder hereunder or with respect to such other securities by their
terms.



     4.4 Adjustment for Reclassification, Exchange and Substitution. If at any
time or from time to time during the term of this warrant the Common Stock
issuable upon the exercise of this warrant is changed into the same or a
different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a recapitalization,
subdivision, combination, reclassification or exchange provided for elsewhere
in this Section 4), the Holder will have the right thereafter to exercise this
warrant for the kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification or other change into
which the shares of Common Stock issuable upon exercise of this warrant
immediately prior to such recapitalization, reclassification or change could
have been converted, all subject to further adjustment as provided herein or
with respect to such other securities or property by the terms thereof.



     4.5 Reorganizations. If at any time or from time to time during the term
of this warrant there is a capital reorganization of the Common Stock (other
than a recapitalization, subdivision, combination, reclassification or exchange
provided for elsewhere in this Section 4), as a part of such capital
reorganization, provision will be made so that the Holder will thereafter be
entitled to receive upon exercise of this warrant the number of shares of stock
or other securities or property of the Company to which a holder of the number
of shares of Common Stock deliverable upon exercise of this warrant would have
been entitled on such capital reorganization, subject to adjustment in respect
of such stock or securities by the terms thereof.



     4.6 Certificate of Adjustment. In each case of an adjustment or
readjustment of the number of shares issuable upon exercise of this warrant or
the Per Share Exercise Price, the Company, at its expense, will compute such
adjustment or readjustment in accordance with the provisions hereof and prepare
a certificate showing such adjustment or readjustment, and will mail such
certificate, by first class mail, postage prepaid, to the Holder at the
Holder’s address as shown in the Company’s books. The certificate will set
forth such adjustment or readjustment, showing in detail the facts upon which
such adjustment or readjustment is based, including a



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statement of (a) the Per Share Exercise Price at the time in effect, and (b)
the type and amount, if any, of other property that at the time would be
received upon exercise of this warrant.




     4.7 Notices of Record Date. Upon (a) any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
sale of all or substantially all of the assets of the Company or any voluntary
or involuntary dissolution, liquidation or winding up of the Company or (c) a
proposed sale event, the Company will mail to the Holder at least twenty (20)
days prior to the record date specified therein a notice specifying (1) the
date on which any such record is to be taken for the purpose of such dividend
or distribution and a description of such dividend or distribution, (2) the
date on which any such reorganization, reclassification, recapitalization,
asset sale, dissolution, liquidation or winding up is expected to become
effective, and (3) the date, if any, that is to be fixed as to when the holders
of record of Common Stock (or other securities) will be entitled to exchange
their shares of Common Stock (or other securities) for securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, asset sale, dissolution, liquidation or winding up.



5. Taxes.




     The Company will pay all taxes (other than taxes based upon income) and
other governmental charges that may be imposed with respect to the issue or
delivery of shares of Common Stock upon exercise of this warrant, excluding any
tax or other charge imposed in connection with any transfer involved in the
issue and delivery of shares of Common Stock in a name other than that in which
this warrant was registered.



6. Registration Rights




     The shares of Common Stock issuable upon exercise of this warrant shall
have the identical registration rights set forth in Section 4 of the
Subscription Agreement dated as of the date hereof between the Holder and the
Company.



7. Closing of Books.




     The Company will at no time close its transfer books against the transfer
of any warrant or of any shares of Common Stock issued or issuable upon the
exercise of any warrant in any manner that interferes with the timely exercise
of this warrant.



8. No Voting or Dividend Rights; Limitation of Liability.




     Nothing contained in this warrant will be construed as conferring upon the
Holder the right to vote or to consent or to receive notice as a shareholder of
the Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest will



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be payable or accrued in respect of this warrant or the interest represented
hereby or the shares purchasable hereunder until, and only to the extent that,
this warrant has been exercised.




9. Warrants Transferable.




     Subject to compliance with applicable federal and state securities laws
and the restrictions imposed by any other written agreement between the Holder
and the Company, this warrant and all rights hereunder are transferable, in
whole or in part, without charge to the Holder (except for transfer taxes),
upon surrender of this warrant properly endorsed and in compliance with the
provisions of this warrant.



10. Modification and Waiver.




     This warrant and any provision hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against
which enforcement of the same is sought.



11. Notices.




     Any notice required by the provisions of this warrant will be in writing
and will be deemed effectively given: (a) upon personal delivery to the party
to be notified; (b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient; if not, then on the next business day;
(c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All notices will be addressed to the
Holder at the address of the Holder appearing on the books of the Company.



12. Lost Warrants.




     The Company represents and warrants to the Holder that upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this warrant and, in the case of any such loss,
theft or destruction, upon receipt of an indemnity reasonably satisfactory to
the Company, or in the case of any such mutilation upon surrender and
cancellation of such warrant, the Company, at its expense, will make and
deliver a new warrant, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated warrant.



13. Fractional Shares.




     No fractional shares of Common Stock will be issued upon exercise of this
warrant. If the conversion would result in the issuance of any fractional
share, the Company will, in lieu of issuing any fractional share, pay cash
equal to the product of such fraction multiplied by the closing bid price of
the Company’s Common Stock on the date of conversion.

















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14. Governing Law.






     This warrant will be construed and enforced in accordance with, and the
rights of the parties will be governed by, the laws of the State of New York
without regard to conflict of laws principles.



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     The
Company has executed this warrant as of this      
              day of March, 2001.



	 	 	 	 	 	 	 
	 	 	 	 	GRAND TOYS INTERNATIONAL, INC.
	 
	 	 	 	 	 	 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	

	 
	 	 	 	 	 	 
	

	 	 	 	Title:	 	 
	

	 	 	 	 	 	

	 
	 	 	 	 	 	 
	HOLDER	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	

	 	
	 	 	 	 
	 
	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 
	

	 	
	 	 	 	 







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Exhibit A to Warrant




SUBSCRIPTION FORM




Date:     
             




Grand Toys International, Inc.

Attn: President




Ladies and Gentlemen:








     The undersigned hereby elects to exercise the warrant issued to it by
Grand Toys International, Inc. (the “Company”) dated as of
                 
  and to
purchase thereunder            
                           (           
    ) shares of the Common Stock of the
Company at a purchase price of
            
    ($               
   ) per Share, for an aggregate purchase price of                       
               ($                    ) (the “Purchase Price”).







	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	

	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	 
	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	








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